New Delhi: India witnessed an all-time high average price of 8.95 per unit for electricity traded on the exchange market, according to the India Energy Exchange (IEX). This high price for Tuesday delivery was on account of reasons such as higher demand from eastern, western and southern states, low availability of coal and reduced wind and hydropower generation.

Scanty rainfall and dry weather in the southern states led to only 241 million units (MUs) of electricity being offered to be supplied on the exchange as compared with a demand for 352 MUs.

Demand for electricity in the spot market is expected to climb further with the upcoming assembly elections in five states: Madhya Pradesh, Rajasthan, Telangana, Mizoram and Chhattisgarh.

Prices have been rising since September, with the last recorded all-time high average price being 8.06 per unit for Sunday delivery. Prices touched 14.56 per unit on the IEX on Monday for Tuesday delivery. The all-time high for electricity in the spot market was 18.2 per unit for 4 October delivery.

This comes against the backdrop of India witnessing an all-time high volume of 5,829 MU of electricity traded in a month on the exchange market in September. The country also registered an all-time high volume of 306.28 MUs of electricity traded in the exchange market on 29 September, due to higher demand from states such as Tamil Nadu, Andhra Pradesh, Telangana, Orissa, West Bengal, Assam, Gujarat and Maharashtra.

A power exchange functions on the lines of commodity exchanges and provides a platform for buyers, sellers and traders of electricity to enter into spot contracts for the same day, coming day, and on a weekly basis.

Of around 1,200 billion units (BU) of electricity generated in India, the short-term market comprises 130-150 BU. This trade volume has grown by 10% annually and is currently valued at about 22,124 crore.